Graph credit: Yahoo Finance
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Just checked Yahoo Finance, the current exchange rate between RMB and USD is:
1 USD = 6.9966 RMB
Look at the exchange rate between USD and RMB in the last 5 years:
Graph credit: Yahoo Finance
Please note: This is not a stock chart - it is the exchange rate between two of the most important economic bodies in the world.
I remember Alexandra, author of China Price told me that during her two year research in south China, many factory owners told them that if the exchange rate keep going on the same trend for one more year, they are going to close the factory.
I suspect the current below-7 exchange rate will cause big problem for them. Anyone can confirm or show evidence to object my guess?
Posted by Jian Shuo Wang at April 11, 2008 1:09 AM
Copyright: You are free to redistribute this work, as long as you keep this disclaimer
and this link: http://home.wangjianshuo.com/archives/20080411_1_usd_69966_rmb.htm
I'm glad that these bloodsucking gold diggers of factory owners need to shut down their operations. But it's a sad story for all those poor migrant workers who will lose their job. Factory shutdowns already rose at the end of 07 in the face of the new labour contract law, and will soon be exacerbated by the USD-RMB exchange rate.
Creating new jobs will be a challenge, but don't forget that net exports still account for only about 10% of China's GDP. Let's hope the domestic market and government intervention will heal some of the wounds.
Posted by: DB on April 11, 2008 1:59 AMexports still account for only about 10% of China's GDP?
but i heard that date account for more than 30% of china's GDP/
what is wrong.
@ lin: Actually, exports account for approx. 40%, imports ~30%. Consequently, net export is ~10%.
For further reference, s. this article: http://www.economist.com/finance/displaystory.cfm?story_id=10429271
I can't tell whether Jonathan Anderson is right or wrong, but his remarks sound quite logical to me.
But your objection is still reasonable for I overlooked that the currency problem will cause exports to sag but imports likely to increase. So this indeed adds some significant upside risk for rising unemployment.
Posted by: DB on April 11, 2008 2:46 PMToo bad I am paid in US dollars and living in China, between the falling exchange rate and rising inflation, I get hit from both sides. Just means you have to be more cautious about how you spend your money I guess.
Posted by: ZL on April 11, 2008 2:59 PMJianshuo,
I posted on this topic at length after transferring money at 6.9835 yesterday! There is some debate over who are the winners and losers of a strong RMB. Frank Gong of JP Morgan has some great thoughts on this topic -- basically highlighting the miraculous 20% productivity growth which has allowed the export sector to survive in the face of higher input prices, higher wage prices, and RMB going up.
Posted by: elliottng (external link) on April 11, 2008 10:53 PMResponding to ZL, I have to say that being paid in RMB and saving in dollars I'm fairly happy at the moment.
Posted by: Byron on April 14, 2008 12:12 AMUSD devaluation is not a good trend for the following simple reasons: More foreign currency will flood China. The flood will worsen the already bloated bubbles of housing market and worsen the already serious inflation. At the same time, it will squeeze the exporting sectors.
Posted by: jqian on April 16, 2008 12:09 PM